A Complete Guide to the Tax Fraud Statute Of Limitations
The tax fraud statute of limitations is the amount of time the IRS has to file charges against an alleged tax fraud offender. The exact time limit will depend on the specific tax fraud offense, so we’ve broken it down in this comprehensive overview.
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Statute Of Limitations Tax Fraud
The statute of limitations usually refers to how much time the Internal Revenue Service (IRS) has to pursue tax fraud or tax evasion crimes by filing charges. For instance, with some crimes, you can not be charged unless the incident is filed no more than a year after it happened.
However, the general rule when it comes to tax crime and tax liability is that the statute of limitations on false or fraudulent tax returns starts immediately when you file the return. Still, this does not apply to early filing as the IRS statute will only become active on the statutory date of filing.
Nonetheless, this can vary depending on what tax crime in the internal revenue code you may be facing. In some instances, the IRS statute will extend the period of the statute of limitations.
What Is Tax Fraud?
Tax fraud is not listed in the United States Criminal Code as a specific crime. However, the category of tax crime comprises several crimes such as claiming deductions not due to you or underreporting income among several others. All of these are usually defined under the all-encompassing term of tax fraud.
Other tax crimes may or may not be deemed tax fraud depending on who you consult. Nonetheless, the following is a list of the statutes of limitations for the most common tax crimes and tax fraud charges under the IRS statute.
- Tax Evasion – 6 years
- False Statement – 6 years
- Failure to Pay Tax – 6 years
- False Claim for Refund – 5 years
- Failure to File a Return – 6 years
- Conspiracy to Defraud the IRS – 6 years
- Failure to Keep Records – 3 years
- Conspiracy to Commit Tax Evasion – 6 years
- Failure to Supply Information – 3 years
- Attempt to Interfere with Implementation of IRS laws – 6 years
- Providing False Withholding Exemption Documents – 3 years
- Disclosing or Delivering False Documents – 6 years
- Assisting or Aiding in Preparing and Presenting of False Tax Returns – 6 years
Since tax law and tax crimes can be very complicated, it is always advisable to seek legal advice from a skilled tax attorney.
If you have been charged with civil tax fraud or criminal tax prosecution, then you should contact the experienced IRS tax attorneys at the law offices of Carver & Associates. We have the experience and skills to help you deal with the IRS and begin moving forward.
What Is the Civil Tax Fraud Statute Of Limitations?
Sometimes the IRS will go back several years if they are pursuing legal action against you for civil tax fraud. Unlike IRS criminal fraud statutes whose limitation period expires in three or six years, civil tax fraud has no statute of limitations.
Note that, just like with all matters to do with taxes, there are exclusions, exceptions, and limitations that you have to keep in mind.
Understanding the Unlimited Statute Of Limitations Tax Fraud
When it is determined that there is a substantial understatement in tax returns, the IRS will usually have six years to challenge the filing. However, this can be overturned when it is demonstrated that:
- There was a filing of a false tax return
- The taxpayer willfully attempted to evade paying taxes, or
- The taxpayer filed a false or fraudulent return
If any of the three apply, the Internal Revenue Service can audit and charge interest and penalties without any limitations period.
In particular, the civil division of the IRS can pursue interest, civil penalties, and taxes without any limitation of time since the crime occurred.
If you are facing civil fraud charges, it is important to contact an experienced tax fraud attorney such as Carver & Associates. We always advise that you call as soon as possible so that we can establish an attorney-client relationship before the situation gets out of hand. This will help us provide the best advice on the legal issues you may be facing.
Statute Of Limitations On Federal Tax Fraud
The federal statute of limitations on tax fraud is how much time the IRS has to file charges against a person suspected to have committed tax fraud.
In most instances, the Internal Revenue Service can audit tax returns for up to three years after they have been filed. This means that the federal statute of limitations is capped at three years.
However, if the IRS determines that you left out more than 25% of your income from the filing, the statute of limitations runs for up to six years.
In some instances, the statute of limitations on tax returns can be longer than six years. For instance, if you attempt to leave the US or hide, the statute of limitations clock stops until you are found at which time it will start running down once again.
Additionally, if the IRS is auditing more than one of your returns, the six-year limitation might be based on the last return filed.
Lastly, you need to remember that on the federal level, that statute of limitations is only applicable if you are facing criminal tax charges and not civil. As such, if the IRS intends to bring charges of tax fraud in civil court, there will be no limit on how far back they can go.
If you are looking for a tax fraud lawyer, then you have come to the best place. Carver & Associates is a law firm that has assisted many high net worth individuals, companies, and organizations having legal issues with their taxes.
How Long Is Statute Of Limitations On Tax Fraud?
If the IRS can prove criminal or civil fraud or if you never file your returns, the statute of limitations could be extended indefinitely.
You could file a return and the IRS could claim that they never received it which would mean the statute of limitations would be activated.
For instance, if you file your returns but do not sign the documents, your returns would be invalid and the three or six-year statute of limitations will not run until you submit the returns properly.
Many taxpayers will also unwittingly alter the language of the penalties for perjury and this usually means that the tax return will also not be valid. While it may seem like a protest, just like not signing the return, it will result in an invalid return.
While you can always amend your returns, if you intend to amend one, it has to be done no more than three years after it was filed. However, the amended return does not restart the three-year audit statute.
As such, it is important to contact experienced tax attorneys if you are being charged with tax fraud. At the law offices of Carver & Associates, we are tax professionals that have helped many clients avoid civil and criminal penalties over the years.
Is There A Statute Of Limitations On Tax Fraud and Tax Evasion?
The IRS will not always have a forever statute of limitations especially for civil tax fraud which can be limited by a variety of factors. These factors often include when the fraud started, who committed the offense, and what transpired during that time.
When it comes to your tax return, the forever statute is governed by the US Code 6501 which limits collection and assessment on the basis of the following:
- False Tax Return – If you have been charged with a fraudulent or false return charge with the intent of tax evasion, the government may assess taxes or bring proceedings in court for the collection of the tax without any assessment.
- Willful Attempt to Evade Tax – Fraud cases involving a willful attempt to evade or defeat tax imposed will result in tax assessment or court proceedings for the collection of owed taxes without assessment at any time.
- No Return – If you do not file your returns, the revenue service may assess or conduct proceedings in court to collect the tax without warning.
Still, it is important to note the differences between civil tax fraud and criminal tax fraud prosecution (which can result in criminal charges). Criminal tax matters can only be brought against you if the last act occurred in the past six years. If it is prosecuted as a civil charge, the six-year statute can expand and there will essentially be no time limits.
As such, a taxpayer that commits a criminal offense such as tax evasion has to be prosecuted within 6 years. On the other hand, there is no statute of limitations for a taxpayer that has committed a civil offense such as tax fraud.
It is important to note that in tax fraud and tax evasion cases the government has a high burden of proof. Nonetheless, if you have been charged with tax fraud or tax evasion, it is important to contact an experienced lawyer such as those at Carver & Associates. We have represented many clients facing tax issues with stellar results and are ready to help you, too.
Does A Tax Investigation Into Fraud Have A Statute Of Limitations?
Tax fraud is a felony charge and when it comes to auditing of tax returns for fraud, it has to be conducted within three years of the tax return being filed on the statutory filing date.
Still, the vast majority of taxpayers that do not include all sources of income may be subjected to a longer statute of limitations period. If you fail to submit income that makes more than 25% of your total income, then the statute of limitations for a tax audit could go back as far as six years.
However, this scenario only plays out if you do not voluntarily agree to let the IRS extend their time for the audit. Since the IRS often asks for extra time to conduct their investigations, it is always advisable to contact an experienced attorney for advice on how to deal with the agency.
If you are facing tax evasion or tax fraud charges, contact Carver & Associates today. After all, such charges could result in huge fines and even jail time if you are convicted. Once we establish an attorney-client relationship and determine you have a case, we will be able to provide the best advice and represent you in your dealings with the IRS or in court. Contact us today and allow us to put our experience and skills to use to ensure the most favorable outcome in your case.
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